Almira Hamdja The Ready-to-Eat Breakfast Cereal Industry in 1994 RTE Breakfast Cereal Industry is so profitable because The private label cereal manufacturers have been able to lower their cost structure relative to the branded cereal manufacturers through the reduction of the advertising expense. They also don’t have a coupon printing cost where branded cereal manufacturers do. In addition to the lack of advertising and promotion cost, they also cut off their production cost by focusing only on cereals with less labor intensive processes and fewer expensive fruits and nuts. They also save up on packaging costs by using clear plastic bags to pack the cereals instead of using boxes. In my opinion, the private label cereal makers are able to withstand a price war with the branded cereal manufacturers. Because branded cereal manufacturers charge higher prices, consumers really depend on the availability of the coupons. But if the coupons are not available,
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This note was uploaded on 05/10/2010 for the course BUAD 497 taught by Professor Degravel during the Spring '07 term at USC.